From now on, interstate
landlords and their tenants cannot use the NSW Tenancy
Tribunal (NCAT)
In a significant decision which forces interstate landlords
and their tenants to use the NSW Local Court or District
Court to determine tenancy disputes under the Residential
Tenancies Act 2010 (NSW), the NSW Court of Appeal has
ruled that it is unconstitutional for the Civil and
Administrative Tribunal of New South Wales (NCAT) (the
Tribunal) to hear disputes between interstate landlords and
their tenants.
The decision is Attorney General for New South Wales v
Gatsby [2018] NSWCA 254 (6 November 2018). The
significance of the decision is reflected in the strong
bench: Bathurst CJ, Beazley P, McColl JA, Basten JA &
Leeming JA. Bathurst CJ delivered the leading judgment, the
other justices agreeing on the orders, some with additional
comments.
In this article we analyse the decision, and the
consequences.
The facts
The Court of Appeal considered two ‘test case’ appeals from
the Appeal Panel of the Tribunal:
- Ms Berri Gatsby, a resident of Queensland, owned
residential premises at Terranora, just south of the
border between New South Wales and Queensland. She
applied to the Tribunal under s 87(4) of the
Residential Tenancies Act for a termination order
for non-payment of rent and an order for possession
against her daughter, Ms Deva Gatsby, who was the
tenant.
- Ms Dibbin, a resident of Queensland, owned
residential premises just south of Tweed Heads in New
South Wales. She applied to the Tribunal under s 175 of
the Residential Tenancies Act for compensation
for the cost of cleaning and repair of damage out of the
rental bond, while the tenant, Ms Johnson, applied for
repayment of rent under s 45 of the Act and a refund of
the rental bond because the premises were uninhabitable
due to “serious mould”.
The consideration: the
Constitutional Issue
Under s 39(2) of the Judiciary Act 1903 (Cth) “Courts
of the States” are vested with jurisdiction to determine
“all matters … between residents of different States” under
s 75(iii) of Chapter III of the Constitution (Cth).
The Court of Appeal determined two questions:
- Whether the Tribunal was “exercising judicial power”
in making an order to terminate a residential tenancy
agreement? And if so,
- Whether the Tribunal was a “court of a State” which
was invested with federal jurisdiction to determine
maters between residents of different States?
In answer to question 1, the Court of Appeal decided that
the Tribunal was “exercising judicial power” by exercising
these functions:
- In determining the existence of a residential
tenancy agreement, whether it was breached, and whether
the breach was sufficient to justify termination under s
87(a) of the Residential Tenancies Act; and
- In exercising the power to enforce its orders under
s 121 of the Residential Tenancies Act.
In answer to question 2, the Court of Appeal decided that
the Tribunal was not a “court of a State” because of a
combination of these factors under the Civil and
Administrative Tribunal Act 2013 (NSW) (the NCAT Act):
- The Tribunal is not designated as a “court of
record”;
- The Tribunal is not comprised “predominantly” of
judges, its members consist of lawyers and non-lawyers,
many of whom are part-time;
- There is no security of tenure for members of the
Tribunal in that they are appointed for fixed terms;
- Members can be removed from office more easily than
judges can be removed.
Therefore, the “minimum requirements of independence and
impartiality” are not satisfied, and so the Tribunal is not
to be treated as a ‘court of a State”.
The consequences
The decision has broad consequences, not only for
residential tenancy disputes.
According to Basten JA:
NCAT has jurisdiction conferred on it by some 146
State statutes. It disposes of about 67,000 applications
a year. The Appeal Panel stated that “hundreds of
Tribunal matters each year are between parties who are
individuals resident in different States”. Similar
figures will apply to other State tribunals, such as
VCAT and QCAT. [paragraphs 275 & 276]
Some State statutes, such as the Residential Tenancies
Act provide that proceedings can only be commenced in
NCAT. Section 119 of the Residential Tenancies Act
provides:
A landlord or former landlord must not commence
proceedings against a tenant or former tenant of the
landlord in the Supreme Court, the District Court or the
Local Court to obtain recovery of possession of
residential premises subject to a residential tenancy
agreement.
It was for this reason that Ms Gatsby and Ms Johnson
instituted their proceedings in NCAT.
The NSW Government has decided not to make the Tribunal a
court, unlike in Queensland, where QCAT has been designated
as a court to overcome the constitutional issue.
Instead, it has introduced an exemption from section 119 for
interstate litigants. They are able to institute
Residential Tenancies Act proceedings in the Local Court
or the District Court of NSW according to the procedure set
out in new Part 3A of the NCAT Act, titled “Diversity
proceedings” which was inserted in anticipation of the
constitutional issue being decided in this fashion.
This right applies not only to landlords with disputes under
the Residential Tenancies Act, it also applies to
interstate litigants who are litigating under other
statutes.
In maintaining the status of NCAT as a tribunal, the NSW
Government has recognised its utility for resolution of
disputes “outside the formal court structure” and for
resolving “the real issues in proceedings justly, quickly,
cheaply and with as little formality as possible” (see s
3(a)(b)&(c) NCAT Act).
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